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Economy in Brief

U.S. Trade Deficit Falls Further To Lowest Since 1999
by Tom Moeller April 9, 2009

Amidst the worldwide economic recession, the U.S. foreign trade deficit fell further during February to the lowest level since November of 1999. The deficit of $26.0B narrowed from the little revised January level of $36.2B. Imports continued to show the effects of the recession and lower oil prices by posting a 5.1% decline which pulled them down by 28.8% year-to-year. Exports went the other way in February as they rose for the first time since July. Consensus expectations had been for a January deficit of $36.6B.

Adjusted for price inflation, the trade deficit in goods narrowed as well. The real trade deficit of $35.6B was its lowest since the 2001 recession and down from $51.3B last February.

The U.S. trade deficit in goods with China narrowed to its lowest level ($14.2B) since early 2006 as imports fell 21.8% y/y while U.S. exports fell 19.0%. The trade deficit with Japan also narrowed sharply to $2.2B, its shallowest since 1984. The U.S. recession dropped imports by roughly one-half from one year ago while exports fell 25.7%.

Measured in chained-2000 dollars nonoil imports fell another 5.3% with the recession (-22.2% y/y). Overall real non-auto consumer goods imports fell 16.8% y/y to their lowest level since early 2005. Imports of automotive vehicles & parts were down 54.1% y/y while non-auto capital goods imports fell 22.7% y/y, also to their lowest since 2005.ยท Services imports fell another 1.9%, about as they did in January (-6.6% y/y), and they were down for the sixth consecutive month. The decline reflected yet another decline in travel imports (-8.2% y/y) while passenger fares were off by 10.4% versus February of 2008.

Despite the recessions abroad, real exports of goods posted a 3.1% increase during February. However, that nevertheless left them down 17.4% y/y at near the lowest level since early-2006. The chained dollar value of non-auto consumer goods exports led the overall gain with an 11.2% increase (-6.8% y/y) while capital goods exports ticked up 0.4% (-16.6% y/y). Real exports of automobiles & parts increased 8.8% but they remained off by nearly one-half during the last year.

Nominal exports of services fell 1.0% (-5.5% y/y), their fifth decline in the last six months. Travel exports were down 13.5% y/y as fewer foreign citizens came to the U.S. while passenger fares fell 11.5%.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database.

The Minutes of the latest Federal Open Market Committee can be found here.

Foreign Trade  February January Y/Y 2008 2007 2006
U.S. Trade Deficit $26.0B $36.2B $61.9B (02/08) $681.1 $700.3 $753.3
Exports - Goods & Services 1.6% -5.9% -16.9% 11.5% 13.0% 13.5%
Imports - Goods & Services -5.1% -6.7% -28.8% 7.3 6.1% 10.8%
  Petroleum -8.2% -18.1% -56.0% 37.0 9.4% 20.1%
  Nonpetroleum Goods -5.5% -5.8% -26.0% 1.3% 4.8% 9.1%
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